Monday, November 23, 2009

Free market economy vs. government control

In 1986 I visited Cuba as a guest of the Cuban government. On one occasion, I was asked by the Minister of Tourism how they could hope to attract American tourists if the embargo were ever lifted. I gave him an honest answer, that they would have to radically improve the services available, as Americans hate to stand in line. An example I used was the ice cream stand in the park across from my hotel. It was open for about three hours each afternoon. There were three long lines of people in front of the stand. When a customer got to the front of the first line, he paid for his ice cream, and received a ticket. He then waited in the second line. When he got to the front, he turned in his ticket. He then got to stand in the line for ice cream.

I explained that in America, all three lines would be much shorter, and each employee would be scooping up ice cream and taking money. "We don't have that much ice cream" was his response. In effect, the long lines were the means of rationing a scarce commodity. I suggested to him that ice cream is profitable, and that it would be in their best interest to produce more and sell more. That is how it works in a free economy, and is exactly how it doesn't work in a socialist system. There is a lesson here for those who want government health care.